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In the absence of a meeting, stockholders may vote by unanimous written consent, where each
stockholder indicates approval of a written resolution by signing it. This eliminates the need for a
meeting and is very effective in corporations with only a few stockholders (such as our hotel
operation). Unlike the rules governing stockholders‟ meetings, however, in some states unanimity is
required to adopt resolutions by written consent. This apparently reflects the belief that minority
stockholders are owed an opportunity to sway the majority with their arguments. A growing number
of states, notably Delaware, permit written consents of a majority, apparently reacting to the
dominance of proxy voting at most meetings of large corporations, where the most eloquent of
minority arguments would fall on deaf ears (and proxy cards).
Directors
At the directors‟ level, absent a special provision in the corporation‟s charter, all decisions are made
by majority vote. Typically, directors concentrate on long-term and significant decisions, leaving dayto-day
management to the officers of the corporation. Decisions are made at regularly scheduled
directors‟ meetings or at a special meeting if there is need to react to a specific situation. Under most
corporate laws, no notice need be given for regular meetings and only very short notice need be given
for special meetings (24 to 48 hours). The notice must be sent to all directors and must contain the
date, time, and place of the meeting, but, unlike stockholders‟ notices, need not contain the purpose of
the meeting. It is assumed that directors are much more involved in the business of the corporation and
do not need to be warned about possible agenda items or given long notice periods.
At the meeting itself, no business can be conducted in the absence of a quorum, which, unless
increased by a charter or bylaw provision, is a majority of the directors then in office. Reflecting
recent advances in technology, many corporate statutes allow directors to attend meetings by
conference call or teleconference, as long as all directors are able to hear and speak to each other at all
times during the meeting. Individual telephone calls to each director will not suffice. Unlike
stockholders, directors usually cannot vote by proxy, because each director owes to the corporation his
or her individual judgment on items coming before the board. The board of directors can also act by
written consent, but, even in Delaware, such consent must be unanimous, in recognition that the board
is fundamentally a deliberative body.
Boards of directors, especially in publicly held corporations with larger boards, frequently delegate
some of their powers to executive committees, or other committees formed for defined purposes.
However, most corporate statutes prohibit boards from delegating certain fundamental powers, such as
the declaration of dividends, the recommendation of charter amendments, or sale of the company. The
executive committee can, however, be a powerful organizational tool to streamline board operations
and increase efficiency and responsiveness.
Although directors are not agents of the corporation—they cannot bind the corporation to contract
or tort liability through their individual actions—they are subject to many of the obligations of agents
discussed in the context of partnerships, such as fiduciary loyalty. Directors are bound by the so-called
corporate opportunity doctrine, which prohibits them from taking personal advantage of any business
opportunity that may come their way, if the opportunity is such as would reasonably be expected to
interest the corporation. In such an event, the director must disclose the opportunity to the corporation,